Persistent criticism of the sluggish securitization fraud task force formed early this year to investigate Wall Street has led to more PR. Now one of the co-chairs of the Residential Mortgage Backed Securities (RMBS) working group, New York Attorney General Eric Schneiderman, has decided to act like he needs more help, after months of official statements that the investigation was proceeding at an acceptable pace.

A law-enforcement group formed to go after wrongdoing related to the financial crisis needs more investigators in order to rev up its work, New York’s attorney general said.

More than 100 people now work for the Residential Mortgage-Backed Securities Working Group, a coalition of U.S. and state regulators and prosecutors announced by President Barack Obama in January. President Obama said the group would “turn the page on an era of recklessness” by bringing lawbreakers to justice.

New York Attorney General Eric Schneiderman, one of the five officials in charge of the group, said it is making impressive progress but could accelerate those efforts with more investigators.

“Do I want more resources, want things to go faster? Yes,” he said in an interview. “Am I asking for more? Yes. Do I believe we’ll get that? Yes.” A spokesman for the attorney general declined to specify how many extra people are needed.

Earlier this week we learned of the doubling of investigators, from 50 to 100. However, given that Robert Khuzami has admitted before Congress that there is no real staff or investigative work specific to the task force, but that the various groups involved in the task force are doing their own investigations with their own resources, the numbers may just be a function of counting as many people tangentially related to the investigations as possible. So a state employee who sent a document dump to some other department is now an “investigator,” or something.

Anecdotally, I’ve heard about the same experts who tried to funnel information to the authorities about financial fraud for years hearing back from staffers associated with RMBS working group members, which has done little but cause frustration among these experts. The working group has put up a website soliciting information from “RMBS insiders,” seeking whistleblower information on fraudulent activities. This comes four months after the announcement of the working group.

In addition, there is now a coordination team in place for the working group, led by career prosecutor and assistant US Attorney for the Eastern District of California, Matthew Stegman. There’s office space in Washington, but unless Stegman is being lent to the working group for a few months, you have someone out in Riverside supposed to coordinate efforts at investigating financial fraud in New York, with most of the working group co-chairs, and the rest of his team, in DC. I suppose they could have found a coordinator in Guam that would make it more inconvenient, but this is pretty close.

So far, existing resources fund the working group’s activities, as the $55 million appropriations request to increase financial fraud spending at the Justice Department was denied.

This is also interesting, and keep in mind that this is in a report trying to defend the working group:

According to the official, the group already has issued 26 subpoenas and collected millions of pages of documents. All of those subpoenas are civil, not criminal. The recipients of the subpoenas aren’t clear, but the group is expected to file its first civil lawsuits later this year, a person familiar with the situation said.

While many securities laws impose a five-year statute of limitations on law-enforcement action, the joint federal-state effort is likely to lean on laws with longer time frames, such as the federal Financial Institutions Reform, Recovery and Enforcement Act. Passed in 1989 in response to the savings-and-loan crisis earlier that decade, the law has a 10-year statute of limitations.

The group also has secured “tolling agreements” with some financial firms, according to a person familiar with the situation. Such agreements allow legal actions to be launched after a statute of limitations technically has expired. Firms sometimes favor the move because it gives them more time to try to negotiate a settlement.

Everything about this screams settlement. The tolling agreements are secured with that in mind; it’s not like financial firms say “OK, you can keep investigating me on expired charges” if they don’t get something out of it. And every subpoena filed so far is civil. The state AGs and federal regulators made a big show of saying that they reserved the right in the foreclosure fraud settlement to pursue criminal charges. Let’s just say there’s been little pursuit there. In the interview, every goal that Schneiderman listed – “meaningful relief,” “get the facts out in the open,” – have civil actions in mind.

Ultimately, I believe the SEC will file the same kinds of actions they’ve been filing, on material misrepresentations to investors. And they will get settlements with the same “neither admit nor deny” treatment. The only difference will be that they will be part of this working group, and used as proof that the working group has teeth. And eventually, the whole thing will just fade away.

UPDATE: Incidentally, there’s supposed to be a two-day meeting of the working group next week at SEC headquarters. I’m sure our bank accountability groups, the ones that bring hundreds of people to the corridors of power to protest, know about this.